Carriers, Advertising, and Niches Are the Future of Location-Based Revenues

New York, New York - January 20, 2011

In 2010, the Location-Based Services (LBS) industry was abuzz with free navigation, application stores, social networking and advertising. Now that LBS wishes are being granted, how will market participants generate revenue?

Everything for free, but is Location-Based Advertising (LBA) big enough?
Without counting the likes of Google and Facebook, LBA for free applications will have grown to almost $1.5 billion in 2016. This will keep many an app developer happy, yet it still represents less than 20% of the overall market. The message here is simple: LBA alone will not support everyone and there will be significant casualties.

Off-deck application stores: an application market bubble?
Off-deck LBS subscriptions/downloads, although very new to this market, already exceed on-deck and carrier subscriptions/downloads. Yet revenues remain an order of magnitude lower. Off-deck stores present a great way of unleashing the long tail of LBS. However discovery, fragmentation and application imitation are now huge issues. “The initial gold rush is ending and the easy money is being chased out of the market,” says ABI Research senior analyst Patrick Connolly. ”Expect to hear a lot more about web-based apps in 2011 and 2012.”

On-deck carriers: revenues are bigger and getting easier
On-deck is quite the opposite, with only a handful of developers dominating. According to practice director Dominique Bonte, “While revenue share agreements are less favorable for developers, carrier control over pre-installation and service bundling helps to rapidly create a huge installed base of monthly paying users. APIs are opening up and location aggregation is getting serious. As this market expands worldwide, so will opportunities for developers.”

LBS app developers: what’s left for them after Google and Facebook?
Returning to the long tail theme, there are still huge opportunities to turn niche LBS into a mainstream market. The fitness and outdoor pursuits market is a great example, where companies such as Navionics, Runkeeper, SatSports,, Augmentra and FullPower are all either in, or approaching, the millions of users, outstripping sales of hardware devices.

ABI Research’s new “Location-Based Services (LBS) Markets: Carrier Vs. Application Store lays bare the complete LBS market, splitting regional markets by on/off-deck, paid/free apps, direct/advertising and platform/developer revenues. In includes forecasts through 2016.

It is part of the Location Platforms and Enablers Research Service.

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